Status of the current Credit-Card Environment:

  • There has been increased competition in the Credit Card industry due to the rise in interest rates implemented by the Federal Reserve over the last couple of years.
  • Variable rates on Credit Cards have been a popular product of the Credit Card companies which presently carry an average interest rate of 16+%. In 2004 the variable interest rate was about 12.5%.
  • The average credit card interest rate in 2005 was 25% for a 10 th of all credit card holders according the Government Accounting Office (GAO). In 2003 there was only a 20 th of credit card holders who had the 25% interest rate.
  • One half of all credit card holders are carrying a balance on there credit cards. (GAO stats)
  • The credit card companies are living in an increasingly competitive environment and due to this you might be able to get your rate lowered, especially if you are carrying a balance.
  • Roughly 1/3 rd of credit card holders have asked for an interest rate reduction and roughly 3/4 th of them have received a reduction in their interest rate.

What you can do?

  • The reason for the credit card companies to consider lowering your credit card interest rate if you are sitting on a balance each month is because they would be giving up a cash-flow stream if you transferred the balance to a lower rate card.
  • If you missed a credit card payment by accident then your rate might be lowered, but if that late payment was due to financial problems you might have difficulty. If the latter is the case then you might consider checking out either Debt Consolidation and/or Debt Reduction services.
  • Credit card issuers handle requests for lower rate on an individual basis by:
    • Taking into account your individual needs
    • Specific card benefits required
    • Credit standing
  • Your Credit Card Company will not budge? It might be time to transfer you balance to a lower rate card. Just make sure that you pay off the new card before the promotional rate expires.

Good Luck!

Brett Sechrest

Contributing Editor to CompareYourLoans.com